Sorting out ideas on gas taxes

With pencils being sharpened on a debt deal, all eyes are on the gas tax as a possible savior for transportation spending. But another option that may cause lawmakers less heartburn is being obscured by the gas tax dust: linking energy production with infrastructure spending.

More revenues for infrastructure could be wrung out of a linkage with energy in a number of ways, but the possibilities discussed the most include instituting a fee on oil production, or expanding oil and natural gas drilling availability. The second option is basically what House Republicans proposed to do as part of their failed surface transportation bill from earlier this year.

Story Continued Below

Some transportation lobbyists, weary of the politics of taxation, say the intense focus on the political will for a gas tax hike ignores other options available. One highway lobbyist said people have a “fixation on the gas tax” that he likened to “the bright light for a bug.”

“We’re a lot more interested in solving a problem. The gas tax is just a means to do that. But it’s not the only means,” he said.

According to one transportation lobbyist who’s been involved in some debt deal discussions, inclusion in a big economic deal could make a gas tax hike easier — but not necessarily easy.

“I don’t know that solving the revenue problem is a gas tax; that isn’t looking real popular at the moment,” he said.

Moving the pain of a new fee “upstream” has the advantage of not being immediately obvious to an electorate jittery about the economy — certainly nothing as in your face as a tax increase at the pump. And the expanded oil and gas drilling option holds appeal for conservatives.

“My understanding at least from the House Republican side is that continues to be an area of interest,” the highway lobbyist said.

The road to some kind of energy linkage is fraught, too. Though Democrats have pushed a fee or tax on oil production as a panacea to many policy issues, the petroleum industry will fight tooth and nail against anything that smells like a new fee.

Erik Milito, director of upstream and industry operations for the American Petroleum Institute, said an upstream fee would ultimately hurt consumers since companies would most likely pass at least some of that cost on to them.

Instead, Milito said API has been pushing for Congress to open more lands to oil and gas exploration as a means to bring in more revenue for whatever purpose lawmakers see fit.

“We think the way to get money is simply by providing access,” Milito said.

Milito’s suggestion is something similar to what House Republicans had proposed as part of their version of a transportation bill, which ultimately tanked under the weight of proposals that were too partisan. Democrats have been cold to this idea, particularly in protected areas of Alaska and off the coastal United States.

Beyond ideological hurdles, proponents of this part of the House’s transportation bill also ran into a money problem. That’s because expanding leases now won’t start generating royalty payments until possibly 10 years from now — not an immediate enough cash infusion to help fix the looming problem with the Highway Trust Fund.